The automobile industry has been among the first industries to have recognized the importance of Six Sigma. The philosophy of continuous improvement, that underlines Six Sigma, has become the guiding mantra for leading automobile manufacturers. Ford Motor Company, headquartered in Dearborn, Michigan is one such company.
Ford has embraced Six Sigma wholeheartedly because the company believes that it results in enhanced profitability. Ford’s logic is clear: six sigma leads to better quality of product; better quality of product results in higher customer satisfaction; higher customer satisfaction translates into high customer loyalty; and higher customer loyalty translates into higher revenues and profitability.
Ford implemented six sigma successfully, in its organization, by first making the top management get committed to the philosophy. Almost the entire top management team of Ford, including its CEO, undergo Six Sigma certification training. Some of the key executives hold Mater Black Belt and Black Belt Certifications. The company has made huge investment in training thousands of its employees in Six Sigma. It is of the view that once the top management gets committed to Six Sigma, it becomes easier to implement it effectively across the organization.
Ford has also linked Six Sigma to the expectations of customers. So quality means delivering on the expectations of customers. For instance if durability and fuel efficiency are two expectations of customers from cars of Ford then the focus of Six Sigma implementation should be on continuously improving durability and fuel efficiency.
Six Sigma has helped Ford in facing competition from not only domestic competitors in America but also from the formidable Japanese and Korean competitors. Japanese cars are well-known for their quality and efficiency. When Japanese car manufacturers, like Toyota, entered the US market in the late 70s their quality became their competitive advantage over American rivals like Ford. Ford used Six Sigma to improve the quality of its cars and erode the competitive advantage of its Japanese manufacturers. It was successful to a large extent; it regained some of the market share that it had lost to its Japanese counterparts.
The case of Ford reveals three things. The first is that Six Sigma has a direct impact on the revenue and profitability of the business. The second is that Six Sigma implementation in the organization becomes more effective when the top management is committed to it. The third is that Six Sigma should be linked to the expectations of customers from the product or service.